Securing the Future of Cities in the Philippine Federalization Agenda:

A City-Level Examination of the Philippines’ Tentative Roadmaps for Federalism

Introduction

In 2022, the Philippine Government targets a complete transition from unitary to a federal system of

government (see DILG Core Group on Federalism, 2017). The popularity of President Rodrigo Roa Duterte

has brought the country to this historic turning point. Local Government Assistant Secretary Jonathan

Malaya, a proponent of Philippine federalization, considers the continuing political success of the President,

whose campaign cornerstone included a planned shift to a federal form of government, as an indication of

the positive reception of the people to the ‘change’ the administration is pushing (Malaya, 2017)

On the ground, political and non-partisan groups respond to the rallying call of the administration by

continuously rolling out information on federalism across the country. Regardless of the intent of their

effort, its lack of synchronicity has caused confusion at such a critical time of decision-making. Amidst the

preponderance of information on federalism coming from all directions, local chief executives have

repeatedly called for a systematic discussion on the subject matter that specifically responds to the local

governments’ concerns, issues, and reservations. For instance, during the Sulong Pilipinas Local

Governance Discussion in 2016, representatives from local government units (LGUs) called for an in-depth

dialogue with the national government to flesh out the details of the federalism roadmap (Union of Local

Authorities of the Philippines ULAP, 2016). City mayors have raised the same concern during the 2017

National Executive Board and General Assembly of the League of Cities of the Philippines (LCP, 2017).

The ongoing attempt at changing the system of governance in the Philippines provides a rare opportunity

to restructure the relationship between its local and national governments. Cities, in particular, must develop

a coherent stand in order to reap the potential gains of federalization for their constituents and the entire

country. Consistent with the commitment of the League of Cities of the Philippines (League, for brevity)

to remain at the forefront in the pursuit of genuine local autonomy, it manifested its support to Constitutional

reform and the proposed shift to a federal form of government. The League continuously seeks to strengthen

its advocacy and to proactively initiate in putting forward the interests of the cities in the national discourse

on federalism.

Given the above rationales, this discussion paper serves as an aide to local chief executives to effectively

participate in the ongoing discussions on federalism, by providing some inputs as they articulate and

substantiate positions that they deem beneficial for cities in general. In this regard, this discussion paper

sets the following objectives:

• Map out key policy issues in Philippine local governance and argue how it could be solved most

effectively by a constitutional reform.

• Identify major actors in the ongoing constitutional reform and explain their interrelationship in

delivering a draft federalist charter for the country.

• Explore Resolution of Both Houses (RBH) No. 8 and the PDP-Laban federalism templates at the

scale of cities and local government in general. This will be done from the standpoint of ‘city-

focused federalism,’ which is presented in a succeeding section.

• Discuss the findings and present recommendations in terms of advocacy, further amendments, and

preparation for the change in the system of governance.

Focus is given to RBH No. 8 and the PDP-Laban federalism roadmaps considering the important role their

proponents play in the Philippine constitutional reform. Nevertheless, it is possible that the final Philippine

Federalism model will be a combination or nothing of both, considering that major actors in the ongoing

constitutional reform are still in the process of deliberating the final provisions. For cities, what can be done

is to identify applicable provisions from the two documents, arrive at a unified position for advocacy, and

substantiate such stance with contexts and evidence, hence the purpose of this discussion paper.

The Need for Lasting Reform: Present Realities of Local Governance in the Philippines

Despite the enactment of Local Government Code (LGC) three decades ago, ULAP Vice-Chairperson and

Isabela Vice Governor Antonio Albano observed that many local governments have not experienced

substantial economic growth and, consequently, have remained dependent on the internal revenue allotment

(IRA) and support from the national government to fund their daily operation and other devolved functions

(ULAP, 2018). The 1991 LGC, the Philippines’ banner decentralization policy failed to distribute political

and economic powers that have evidently resulted in an uneven economic development and public service

outcomes, as will be discussed in this section. Accordingly, Philippine authorities are underway in rewriting

the 1987 Charter with the announced aim of diffusing the concentration of these powers.

Under the current set up, taxes collected nationwide and proceeds from government borrowing are pooled

and distributed to different public services across different levels of government in the national budget. The

national government deals directly with third-tier local governments (i.e., cities and municipalities) in the

provision of national-level services and transfers to local governments. In theory, such a centralized fiscal

system enables government revenues to be distributed so that inequality between localities are minimized

(City Growth Commission/CGC, 2014).

In practice, however, economic inequality is very evident at the subnational level. The city and municipal

poverty incidence map below (see Figure 1) show a concentration of the poorest LGUs in Mindanao.

Meanwhile, LGUs with lower rates of poverty incidence appear to cluster in Luzon. Through time, it can

also be observed that the rates of poverty incidence of LGUs in Mindanao are increasing. An opposite trend

can be inferred for Luzon and Visayas. There appear to be more green-shaded areas in Luzon and Visayas

in 2012 than in the two previous years, indicating that the poverty condition of the LGUs in the two major

island groups is improving.

Figure 1. Poverty incidence of cities and municipalities

Source: Philippine Statistical Authority (2012)

The same observations can be said specifically about cities. As shown in Figure 2, Mindanao has the highest

average city-level poverty incidence rate, meaning the poorest of the cities in the country are located in the

southern Philippines. The Visayas closely follows with just a difference of 3 percent. The richest of the

cities, in terms of lower poverty incidence rates, can be found in Luzon.

Figure 2. Mean City-Level Poverty Incidence per Major Island Group, 2015

Data Source: Philippine Statistical Authority (2012)

Dr. Romulo Miral, Executive Director of the Congressional Policy and Budget Research Department

(CPBRD) attributed such persistent poverty situation to a highly centralized government structure, giving

rise to a substandard quality of government services (CPBRD, 2018). As shown Figure 3, the portion of

LGUs in the total expenditure has been quite minuscule. Notwithstanding the passage of the LGC in 1991,

there has not been a substantial increase in the local government share in the years to follow. The fact that

local government access funds from a common pooled resource is also an exacerbating factor because it

means that the consumption of the resource by an LGU reduces the amount available to others. Actors are

thus inclined to maximize their share in the common resource pool. Worse, the common pool resource

creates a condition where corruption could be tolerated, and patronage politics and political dynasties may

thrive (CPBRD, 2018) .

New provinces, cities, and municipalities are created as a way of securing more funds from the national

government budget (Miral, 2018a) . Existing cities, in particular, are under threat of decreased IRA because

of the so-called Cityhood Bills. These bills seek to amend Section 450 of the LGC by exempting

municipalities earning 250 million annual income from the land and population requirements to become a

component city (e.g., Senate Bill Nos. 233, 643, and House Bill No. 4149), and those facilitating the

immediate cityhood of capital towns of cityless provinces. During a legislative hearing of the cityhood bills,

LCP National President Angeles City Mayor Edgardo Pamintuan capture succinctly the fiscal implications

of such legislation to exiting cities:

Many old and small cities still struggle with their budgets, forcing them to rely on their IRA

allotments which will decrease as new cities increase in number. On the other hand, a new city even

with a very small population gets the bonanza of increased revenues largely because of increased

IRA, as compared to when they were still municipalities, while the old small cities are at the losing

(LCP, 2018 para 3).

Figure 3. National and Local Governments’ Share of Total Expenditures

Data Source: Miral (2018b)

Assuming that a centralized fiscal system does work in terms of economic equalization, it is still

unsustainable to rely upon the most productive parts of the economy, through redistribution, in order to

meet public service needs of the other parts of the country (CGC, 2014). Allowing cities the capacity to

bridge their own fiscal gaps can thus go a long way. In this regard, tax assignment will help ensure that

cities have access to revenues that they need to fund functions devolved to them. However, cities and other

subnational government’s revenues have been typically weak (Manasan, 2017). As Table 1 shows, own-

source revenues (OSR) and local taxes are next to nothing when measured as a percentage contribution to

the national wealth. There is also no substantial improvement before and after the passage of the 1991 LGC.

This suggests the weak revenue autonomy of LGUs in the country (Manasan, 2017).

Table 1. OSR and Local Taxes as Percentage of GDP, Pre- and Post-LGC

Revenues

Pre-LGC (1985-1991) Post-LGC (1992-2016)

Prov Cities Munis LGUs Prov Cities Munis LGUs

LGU OSR 0.14 0.30 0.26 0.70 0.14 0.77 0.24 1.15

Local tax 0.07 0.22 0.17 0.47 0.07 0.62 0.15 0.84

RPT 0.06 0.12 0.10 0.28 0.05 0.26 0.06 0.37

Local business tax 0.07 0.06 0.13 0.30 0.07 0.36

Source: Manasan (2017)

With regard policymaking powers, the enforcement of local autonomy is still decided Congress despite

being guaranteed under the 1987 Charter. Local autonomy is granted to the local government units through

the enactment by Congress of the local government code. Essentially, the powers remain with the national

government, only allocating certain powers and responsibilities to the local governments subject to the

guidelines and limitations as Congress may provide.

The genuine exercise of local autonomy is also hampered by the imposition of unfunded mandates on

LGUs. Since the enactment of the LGC up to 2015, at least 134 laws did not receive funding or remained

underfunded More than half of these laws (78 percent) concern local governments (Hernandez-Sempio,

2016). The presence of unfunded mandates stands as an utter irony to the country’s decentralization policy

and a huge obstacle to the achievement of its goals. Our top-down approach to policymaking reflects an

underlying assumption that national legislators could determine better what more needs to be done at the

local level that LGUs are not doing and therefore had to be mandated. Notwithstanding the three-decade

decentralization policy of the Philippines, such dynamics underpinning unfunded mandate indicates how

still highly centralized governance in the country is.

The government has embraced these highly centralized policies, which have been evidently anti-urban. The

concentration of powers and resources in the executive and the central government undermines the

government's capacity to efficiently and effectively provide public goods, such as infrastructure, education,

and health services that are essential for broad-based and inclusive economic growth. The creation of

unfunded laws displaces other essential local government priorities, impose contradictory and inconsistent

requirements, and compound the fiscal difficulties of local government units to render basic services to the

people. Cities are constrained in their ability to realize their full potential for their residents and for the

nation.

Proper expenditure and tax assignment, appropriate government transfers, and better government

interrelations are key in addressing these local government challenges. While either a shift to federalism or

decentralization will contribute in achieving these aspirations, federalism may be a better option for the

following reasons: improved vertical and horizontal fiscal balance, well-designed intergovernmental

relations, and institutions that facilitate self-rule and shared-rule, among others (CPBRD, 2018).

Federalizing also involves constitutional reform which means that these governance powers are devolved

to local government in the constitution, not in legislation. They cannot be easily taken away or rendered

unfunded.

Shaping the Foundations for the Federal Republic: Major Actors in the Philippine

Constitutional Reform

The role of Constitution for any state is to organize its government and shape how its political system

works. In view of the Philippine government’s plan to federalize, accordingly, the country is undergoing

processes that may lead to the amendment of the 1987 Constitution. There appear to be three (3) major

groups in this historic endeavor: The Congress with its two chambers (i.e., Senate and House the of

Representatives), the Consultative Committee on Constitutional Reform, and the Partido Demokratikong

Pilipino-Lakas ng Bayan (PDP-Laban).

The authority for constitutional amendment rests entirely on Congress when it constitutes itself as a

constituent assembly. However, the question of whether or not its two chambers should vote jointly or

separately on proposed amendments has caused an impasse between the senators and congressmen. While

this issue has yet to be resolved, the leaders of both chambers have agreed to momentarily set aside their

differences and concentrate on drafting proposed changes to be submitted to a plebiscite (Casayuran, 2018).

Meanwhile, the Consultative Committee on Constitutional Reform, a presidential creation, is tasked to

review and conduct consultations on the provisions of the 1987 Constitution. The Committee is set to submit

its report by the 3rd State of the Nation Address this July (Ranada, 2018). Finally, the PDP-Laban

Federalism Institute, which serves as the main research and advocacy arm of the party for the country's

transition to federalism, has already submitted its proposed constitutional amendments to the House

Committee on Constitutional Amendments on 27 September 2017 (Yap, 2017).

Mr. Arthur Aguilar, a member of the Consultative Committee described a process of triangulation among

the three parties in coming up with the final Philippine federalism charter, during the Union of Local

Authorities of the Philippines (ULAP) Executive Board Meeting on Federalism (see ULAP, 2018). The

interrelationship as illustrated in Figure 4 will help achieve a “broad political consensus” for the final

Philippine federalism model, according to Mr. Aguilar.

Figure 4. The Philippine Constitutional Reform

The PDP-Laban Federalism Institute’s draft Charter is considered as a “working template” in terms of using

its provisions as points of reference in deliberating what changes should be reflected in the new

Constitution. There appears to be two (2) facilitating circumstances for such regard to the PDP-Laban’s

template. First, it is the product of the federalism think-tank of the majority party in both houses of

Congress, which is also headed by the incumbent president. Second, three (3) members of the Consultative

Committee are co-drafters of the PDP-Laban proposed organic law: Sen. Aquilino Pimentel Jr., Prof.

Edmund Tayao, and Prof. Julio Teehankee. Nonetheless, these do not guarantee the Congress’ adoption of

the PDP-Laban version. The Senate and the House of Representatives could propose their own and, in fact,

have done so in Joint Resolution No. 8. Meanwhile, the Consultative Committee, being an exercise within

the executive branch, does not have the constitutional authority to propose revisions to the 1987 Charter as

the Congress has. In relation to the latter, Fr. Ranhilio Aquino dean of the San Beda Graduate School of

Law described the Consultative Committee, of which he is a member, as “consultants” who will provide

good research to Congress that will sit as a Constituent Assembly (see Cabato, 2018). In a Constituent

Assembly, Congress has the sole power to write the new Constitution that will be voted upon by the people.

Nonetheless, Mr. Aguilar said that an important mission tasked to the Consultative Committee is to help

make the constitutional reform a highly consultative process.

City-Focused Federalism

Political analysts advocate greater constitutional and federal standing for cities (Langan, 2017; Slack &

Bird, 2006; Weinstock, 2014). Cities possess properties that qualify them for inclusion in constitutional and

federal arrangements. Typically, cities and metropolitan areas constitute the engines of the national

economy and centers of trade and investment. In fact, the Economist Intelligence Unit (2013) reports that

cities already account for 80 percent of global growth. A study by the World Bank, meanwhile, credits 70

percent of the national gross domestic product of the Philippines to its cities with the seven largest providing

more than half (54 percent) of the formal employment in the country (Baker et al., 2017).

More and more of the world’s population also live in cities. This is also true for the Philippine population

which is 36 percent urban based on 2015 statistics. By 2050, this will likely increase to 65 percent or 102

million people, according to the same World Bank study. With adequate institutional and physical

infrastructure, the density and diversity Philippine cities possess can be harnessed as an effective source of

collaborations and local innovations (Baker et al., 2017).

Overall, countries that allow cities wider political and economic leeway, in exchange for stronger

accountability, are doing better (CGC, 2014). At the heart of the Philippine Federalism project is an

economic imperative that is, to distribute gains of development evenly across the country. Cities, in

particular, serve as the economic growth nodes located in different parts of the country and, as such, the

importance of including them in the Philippine federalism agenda can therefore never be overstated. As

highlighted in the previous section the overt centralization of policymaking and resources in the Philippines

stifles cities from realizing its true potentials in terms of labor, capital, and ideas. LCP National President

and Angeles City Mayor Edgardo Pamintuan believes that local executives are the most familiar with the

local socio-political dynamics and have the first-hand experience in running the government at the

grassroots level (see ULAP, 2018). The framers of the Constitution thus need to be receptive to the

collective sentiment of the local chief executives in designing the rudiments of Philippine federalism.

But how should city-focused federalism look like? Langan (2017) elucidates by suggesting that cities

become central to federalism when such political system provides them with more resources, local decision-

making, less pre-emption, and a seat at the table (i.e., representation). Furthermore, it is important for such

powers to be enshrined in the Constitution to ensure that they cannot be easily changed, modified, or

repealed in the long term.

Figure 5. Elements of a City-Focused Federalism

A city-focused federalist system includes a national platform where the voices of cities are heard and

respected. Including cities and other local governments in important discussions allows local innovations

to be implemented more widely as national policies. National representation from cities would also facilitate

a collaborative decision-making process, which is particularly beneficial to transborder projects such as

national and regional infrastructure. Considering that the goal of such undertakings is increased

connectivity, it is worthwhile to ensure that the policy actions are chosen by a system of cities and other

levels of government rather than a top-down exercise.

At the subnational level, cities should not have to wait on acts of Congress to build roads or spur housing;

they should be empowered to set priorities and lead their implementation. Local decision-making would

allow city governments to tailor location-based policy decisions, expenditure, and investments based on

local data and evidence. On the other hand, “centrally determined policy, lacking local information and

coordination, relies on the mere hope that one size fits all” (CGC, 2014, p. 21).

Decision-making powers must be complemented with local control over fiscal mechanisms. In order to fuel

the implementation of their priority programs, cities must have multiple revenue streams such as income,

property, and sales and attendant authority to determine the tax rates. Such flexibility will allow for tax

collection schemes being customized according to cities’ local economies and preferences. While cities are

allowed to generate revenues from their own sources, city-focused federalization also recognizes that cities

need reliable funding from the federal government and not unfunded mandates. It does not remove the need

for redistribution entirely. The central government will still need to allocate resources to places that do not

yet have the administrative capacity or economic foundations for fiscal self-sufficiency.

On the part of the national/federal government, a clear line must be drawn between areas where it should

lead and where it must empower. It needs to do the things that cities and local governments cannot do (e.g.,

national defense). At the same time, they must be given the flexibility to adapt to local conditions and set

their own priorities but with greater accountability. Expenditures of the national/federal government must

also account for variation within the country in terms of needs and should be provided with less

conditionality.

Locating Cities in the Philippines’ Tentative Roadmaps for Federalism

Using the concepts described in the preceding section as a framework, this section conducts a city-level

examination of two of the most prominent, yet tentative, roadmaps for the country’s shift to a federal form

of government: the RBH No. 8 and the PDP-Laban proposed Charter.

A seat at the table: National and Regional Representation

The Federal Assembly/House of Representatives. In both proposals, the legislative branch of the Federal

Republic of the Philippines shall remain constituted of two chambers. Under the PDP-Laban version, the

lower chamber shall be known as the “Federal Assembly” while in RBH No. 8 it shall remain as the “House

of Representatives.” The upper chamber shall remain as the “Senate” in both versions. Cities with a

population of at least 250,000 voters shall have one representative in the Federal Assembly (Article VI

Section 2) or the House of Representatives (Article VI Section 5) depending on the version. (2017)

The Regional Commission. In the PDP-Laban’s version, there shall be Regional Commissions to perform

the role of an interim regional government until the promulgation of the regional organic acts and the

establishment of the regional assemblies. It shall act as a collegial body vested with executive and legislative

powers (Article X Section 28). The Regional Commission for each region shall be composed of the

incumbent governors of provinces and mayors of highly urbanized cities and independent component cities

within the region.

The Regional Assembly/Legislature. In the PDP-Laban version, the organic act shall provide for the

establishment of a “Regional Assembly” as the regional legislative branch, which shall be composed of two

representatives directly elected from each province and one representative directly elected from each highly

urbanized or independent cities. The Regional Assembly shall exercise the legislative power of the regional

government as provided by the constitution, the organic law, and the law (Article X Section 31).

Meanwhile, the RBH No. 8 version also provides for the creation of a regional-level unicameral legislature,

which shall be known as the “Regional Legislature.” It shall be composed of three members from each

province and from the highly-urbanized independent city, independent city or independent municipality

within the territorial boundaries of the Region (Article X Section 18). They shall be nominated by the

respective local legislative body from among its members and appointed by the Regional Governor.

PDP-Laban RBH No.8

Figure 6. A Seat at the Table: PDP-Laban vs. RBH No. 8

The above discussion is graphically summarized in Figure 6. With regard the 250,000-voting population

requirement there shall only be 20 out of the 145 cities that will secure a seat in the Federal Assembly.

Furthermore, eligible cities are clustered mostly in Luzon (see Table 2). Meanwhile, only 38 cities will

have direct representation in Regional Governments. At the same time, not all Regional Governments will

have the benefit of direct city representation, particularly the Autonomous Region of Muslim Mindanao

(see Figure 7). City representation is again skewed in favor of Luzon and Metro Manila. Those without

direct representation such as component cities shall have to go through their respective provinces. (2017)

Table 2. Cities with at least 250,000 Voting Population

CITIES ISLAND 2015 VOTING

POPULATION

1. QUEZON Luzon 1,092,156

2. MANILA Luzon 1,020,144

3. CALOOCAN Luzon 636,255

4. ANTIPOLO Luzon 442,137

5. MAKATI Luzon 387,590

6. PASIG Luzon 368,652

7. LAS PINAS Luzon 340,085

8. DASMARIÑAS Luzon 326,070

9. PASAY Luzon 285,286

10. PARAÑAQUE Luzon 271,942

11. TAGUIG Luzon 270,731

12. CALAMBA Luzon 268,283

13. BACOOR Luzon 260,156

14. VALENZUELA Luzon 259,929

15. DAVAO Mindanao 873,670

16. ZAMBOANGA Mindanao 412,795

17. CAGAYAN DE ORO Mindanao 305,321

18. CEBU Visayas 630,003

19. BACOLOD Visayas 274,541

20. ILOILO Visayas 261,481

Source: COMELEC (2015)

Figure 7. Number of HUC/ICC Per Region

Local decision-making and Less Pre-emption

In the current setup, there are overlapping mandates between the National Government and LGUs (Malaya

2017). The PDP-Laban roadmap mitigates this by delegating to each level of government exclusive and

shared jurisdictions (Article X Sections 20 and 23 to 27). The Federal Government shall have over

legislative powers over matters concerning the entire state such as national security and defense, foreign

affairs, immigration, and currency among others. Regional governments shall have exclusive legislative

powers applicable within its territorial jurisdiction over social welfare and development, waste

management, irrigation, water, and sewerage among others. LGUs, meanwhile, are guaranteed

representation, particularly in Federal and Regional legislative branches. All residual powers shall remain

with the Federal Government unless delegated to the Regional Governments.

Under RBH No. 8, cities shall have the power to create its own sources of revenues and to levy taxes, fees,

and charges within the confines of the basic autonomy, equality, and limited sovereignty reserved for

Regions, and subject to the guidelines and limitations set by the Federal Congress (Article X Section 4).

Such taxes, fees, and charges shall accrue exclusively to the city concerned. (Article X Section 25)

More resources

PDP Laban RBH No. 8

Figure 8. Federal, Regional, and Local Governments’ Share of the National Wealth:

PDP-Laban vs. RBH No. 8

The PDP-Laban and RBH No.8 proposals provide for the creation of a federal budget that shall be devoted

on expenditures of the national government, and a regional and local government budget wherein LGUs

have the rights to decide how it will be spent without waiting for the approval of the national government.

The two versions diverge on the matter of how big a portion shall go national and local.

At present, 83 percent of national government revenue is controlled by the national government and only

17 percent are allocated to local governments through the IRA. Under the PDP-Laban formula, the

distribution will change in favor of regional governments: 60 percent to be controlled by the Regional

Governments and only 40 percent by Federal Government (Malaya, 2017). Meanwhile, the RBH No. 8

prescribes that the national government shall get 20 percent of the taxes and revenues collected, while 80

percent shall be given to the regional government. Of the 80 percent regional budget, 30 percent shall

remain with the regional government while the 70 percent shall be divided among the LGUs. (Article X

Section 22). Under the same section of the RBH No. 8, the taxes mentioned in the 1991 LGC shall include

all revenues and taxes imposed or collected by the Federal Government.

The Regions are obligated to remit directly the shares of the provinces, cities, municipalities, and barangays

within fifteen days from the receipt of the shares from the Federal Government without unnecessary delay

(RBH No.8, Article X Section 23). The distribution among the provinces, cities, municipalities, and

barangay shall be governed by the formula provided in the 1991 LGC (RBH No. 8 Article X Section 22).

Under the PDP-Laban version, it shall be determined by the Regional and Local Government Code, at least

eventually (Article X Section 13).

Unequal distribution of public funds, a major cause of underdevelopment in the country, has been a key

area of reform in both the Philippine federalism roadmaps. Both pursue a principle of fiscal federalism in

which finance should follow the division of powers, which means that the regional and local governments

should be given adequate wherewithal to exercise the powers devolved to them. However, it is worthy to

note that RBH No. 8 offers a larger portion of national revenue to regional and local governments and even

details the scheme of appropriation between the two.

The Local Government Code

Within the context of the PDP-Laban roadmap, the Parliament shall enact a comprehensive Regional and

Local Government Code (RLGC) within a period of 18 months from the ratification of the new Constitution.

The RLGC shall define the “powers, structure, functions, and responsibilities of the regional government

as well as its accountabilities in relation to the federal government as well as its accountabilities in relation

to the federal government including devolution mechanisms” (Article X Section 13). Professor Edmund

Tayao, a member of the Consultative Committee, expects that the Internal Revenue Allocation, should it

be subjected to change, shall manifest not in the Constitution but on the RLGC (LCP, 2017). The RLGC

shall be applicable symmetrically to all regions except for autonomous regions established under the 1987

Constitution.

The RLGC shall include a provision for the establishment of a Regional Commission, which shall act as

the interim regional government (Article X Section 6). The Regional Organic Act shall be submitted to the

federal parliament for approval through the Regional Commission and the Regional Consultative

Assembly, voting separately, or a Regional People’s Initiative (Article X Section 29). The Organic Act will

stand as the legal framework for the Regional Government to be created. The process of transitioning is

illustrated in Figure 9.

Figure 9. Transition Based on the PDP-Laban Federalism Institute’s Roadmap

On the other hand, under the RBH No. 8, the 1991 LGC as amended will still be in effect unless repealed

by the Federal Congress. Its provisions shall continue to govern provinces, cities municipalities, and

barangays (Article X Section 22).

Discussion

In both federalism roadmaps, cities wield unprecedented decision-making powers and financial flexibilities

to become financially self-sustainable. It is highly encouraging to see cities granted a degree of legal

standing in both drafts of a new Constitution, in line with the government’s endeavor to federalize.

Considering that cities are constitutional nonentities in most countries (Weinstock, 2014), the idea is among

firsts. The elements are interconnected and work together to empower cities.

Reflecting on some of the proposed amendments to the 1987 Constitution, federalizing may help empower

the cities by granting them constitutional standing to regional and local governments. Under the federal

system, the revised Constitution shall grant policymaking and funding powers to LGUs. Such powers,

therefore, cannot be changed, modified, altered or repealed through simple legislation. These provisions

shall be self-executing in nature, which means they need not depend on enabling laws to be implemented.

With such a constitutional guarantee, LGUs are empowered in policymaking process to stand for the

peculiar needs and interest of their territorial jurisdictions.

LGUs shall also be given a closer access to more funding than the current set up. It is further proposed that

taxes collected within the territorial jurisdiction of each region shall be retained and accrued to the regional

government. The regional and local governments shall only give a certain percentage to the federal

government, effectively reversing the direction of cash flow. Furthermore, regional and local governments

shall have the power to formulate on the creation of its sources of revenues and levy taxes, fees and charges

subject to the limits of the constitution.

Disempowerment, unaccountability, and lack of resources have served as a spawning ground for uneven

economic outcomes among subnational governments in the past three decades. The combined policymaking

and funding powers given to regional and local governments may curb such a lingering problem in the long

run. Through the policymaking power, LGUs’ intimate knowledge of their constituents’ needs is equipped

with the authority to respond to them. The funding power places local governments in a position to set

priorities based on knowing with certainty what resources are available to them. Finally, passing more

funding through to LGUs with fewer stipulations from the federal republic will help LGUs lead the

implementation. The whole experience may also foster accountability and a sense of ownership among

local governments.

Recommendations

Cities must be vigilant and united in promoting city-friendly proposals in the new Constitution. The

Consultative Committee targets to finish its version of the new Constitution on 30 April 2018 (Philippine

Information Agency, 2018). Within the next two months after this deadline, the Committee will be divided

into teams for regional and provincial consultations. This provides a critical opportunity for cities’

sentiments to be heard. Considering the short time period for the consultation, the plethora of interest groups

in attendance, and that the consultations will be done simultaneously in different locations, this could be

only possible if they will project a unified voice on local governance issues affecting them. In this discussion

paper, a number of provisions that cities should consider collectively supporting have already been

identified.

Consider advocating representations for all cities, not only those with certain characteristics. The

prerequisites for direct city representation at the federal and regional levels, as they are now, tend to be

restrictive because such characteristics conform with certain geographical patterns as far as cities are

concerned. It goes against the avowed aim of federalization to diffuse political power evenly across the

country. In this regard, cities may want to have a conversation on advocating direct representation for ALL

cities at the federal and the regional levels.

Bolster cities’ position on federal and regional local governments’ shares in the national revenue. One

of the most critical provisions currently being finalized is the share among federal, regional, and local

governments in the national revenue. There is a substantial difference in what the two roadmaps for

federalism stipulates, with RBH No. 8 offering a larger share for regional governments. Regardless, cities

as part of the subnational government should have a say on this. On our part, there is a need to determine

through empirical evidence the portion of the national revenue that will meet the demands of efficient local

governance in the country. Having an empirically grounded stand will help cities secure an optimal share

of the national revenue. Manasan (2017) estimates that at least 50 percent of the national revenue should

go local, based on the exclusive and shared powers between the federal and regional governments.

Bolster the position on cities’ share in the local government budget, in view of the formulation of

PDP-Laban’s Regional and Local Government Code (RLGC). As discussed, the RLGC shall be the

platform where the budget allocation for cities, municipalities, and barangays shall be decided. In this

regard, cities must we must be part of the decision on how to divide resources among LGUs. Representation

of cities at the Federal Assembly shall become invaluable. The creation of the RLGC also serves an

opportunity to introduce the amendments cities wanted in the 1991 LGC, such as the institutionalization of

Inter-LGU Cooperation (ILC); the thorough delineation of duties and responsibilities in service delivery

across various levels of government; delineation of the debt service ratio; and, streamlining of the local

business tax structure among others. Same with the preceding recommendation, our position must also be

backed by a strong empirical evidence.

However, it must be noted that the application of RLGC shall not be symmetrical to all cities. The

proposed RLGC will not cover autonomous regions created under the 1987 Constitution such as the

Autonomous Region of Muslim Mindanao (ARMM). The alternative legal framework for local governance

in these areas shall likely be created at the regional level.

Prepare for the ‘shift’ in order to reap the full potential of Philippine federalization. As cities shall be

able to generate and rely upon their own revenues under federalism, so too must they be able to manage the

increased independence from the national government and the unpredictability of revenue from devolved

tax assignments. City governments must enhance their capacities for governance, policymaking, long-term

strategic planning, risk management, data collection and analysis and stakeholder engagements and inter-

LGU cooperation among others (CGC, 2014).

Conclusion

In this discussion paper, major local governance issues affecting cities were identified. Arguing that

constitutional reform offers a solution to such challenges, an overview of its ongoing review was provided.

Using a ‘city-focused federalism’ lens, this paper observed several provisions in both federalism roadmaps

that could benefit cities if implemented. Nonetheless, there are also areas that may need adjustments to

ensure that cities shall be adequately represented at the federal and regional levels. Overall, these findings

serve as inputs to local chief executives as they bolster positions that secure cities’ interest in the Philippine

federalization agenda.

The lingering impediments to Philippine local governance cannot be addressed without substantial shifts in

policy. More rights and protections for cities is hardly achievable through mere legislation alone, as the

case of the 1991 LGC suggests. Considering cities play an important role in long-term economic growth,

they represent an appropriate scale for implementing governance reform, making more localized decisions,

and conveying government presence at the grassroots through public services. It is therefore important for

cities to take a proactive stance in the ongoing constitutional reform. By doing so, cities can contribute to

shaping the nature of federalism in the country.

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